Defense companies are among the many industries that must brace for a coronavirus shock.
FREMONT, CA: In terms of both its propensity to spread and cause harm as well as its power to bring businesses and entire economies to a halt, the world misjudged COVID-19, an illness caused by a novel strain of coronavirus that surfaced in late 2019. Many governments are implementing either mitigation or all-out suppression methods, which are wreaking havoc on both the population and the economy. Some industries, such as retail FMCG (fast-moving consumer goods) and medical commerce, have benefited from the whiplash, owing to unanticipated demand growth due to panic buying, while others, such as hospitality and civil aviation, have suffered a severe downturn. It's crucial to remember that while the impact of the pandemic will be immediate for some firms, it will take longer for others. This is especially true for industries that are subjected to a wide range of externalities, including political, economic, and social factors. This is where the defence industry fits in. While it is too soon to determine whether the global pandemic will cause the defence industry to remain flat, take a major or minor dip, or grow unaffected, defence companies must identify the major impact points and assess how they will affect business development plans, supply chains, and bottom lines. This will aid in the development of preventative measures that may assist businesses in weathering the storm.
The impacts on the military industry as a result of the propagation of COVID-19 and related contagion-control measures can be summarised into five primary impact points:
• Facilities for production and manufacturing, as well as supply chains, might well be impacted.
• Business growth efforts may be harmed - some may lose, while others may gain.
• Defence equipment and related services may see a decrease in demand.
• Companies may be forced to make challenging decisions that affect both finances and capabilities.
• Stock price falls will have unintended consequences.
Supply chain disruptions are one of the most noticeable consequences of the pandemic's influence on the defence industry. Companies that are located in countries that have been badly hit by the virus, or those that rely on supply networks that are located in such countries, are the first to be affected by the outbreak. Production will be affected by the nature of the defence technology industry base's (DTIB) supply chain and resourcing patterns, as production queues with branched-out supply networks are more likely to suffer supply-side restrictions. The European DTIB contains several branched supply chains, with various components and subsystems from various sources of origin combined to build a final platform or solution. Regulation and reprioritization of supply chain manufacturing tasks could have an impact on defence production. Such actions are not ruled out, especially if government facilities are diverted to produce medical equipment such as ventilators. Technological variables and manufacturing paradigms play a role in determining the magnitude of the influence. Defence companies with highly automated factories, for example, are less likely to be harmed by social alienation. Similarly, organisations that haven't fully migrated to particular manufacturing paradigms, such as just-in-time production, may retain more inventory and hence be able to withstand supply-side shocks for a longer period.